Now you Have a Captive What do you Do

Now you have a captive,
what do you do?
17 June 2008, Tuesday


Speakers
Panellists:
Traver Alexander, Research Officer,
Bermuda Monetary Authority (BMA)
Brad Adderley, Partner, Insurance Team, Appleby
Gina Smith, Actuarial Services,
Bermuda Monetary Authority (BMA)
William Noonan, Vice President,
Risk Management, Structure Tone, Inc.
Moderator:
Khim Chia, Assistant Vice President, Business Development
Marsh Captive Solutions - Bermuda


Agenda
1.
2.
3.
4.

Overview of Bermuda Captive Market – BMA Review
Ongoing Compliance
Actuarial Report: What is BMA looking for?
Case Study:
 Now I have a captive, what do I do?
 Challenges faced by Risk Manager

 If I can start all over again, would I do it differently?


Overview of Bermuda Captive
Market
Traver Alexander, Research Officer
Bermuda Monetary Authority (BMA)



Sources:
•

Statutory Financial Returns

•

Annual Market Survey on Captives
Administered jointly by the BMA and BIMA,
the Bermuda Insurance Managers Association
* Preliminary figures for year-end 2007


•

Gross Written Premiums
a) Rates of Retention
b) Percentage of Business Assumed
c) Geographical Location of Risk

•

Types of Insurance Coverage
a) Main Property Lines of Business
b) Main Casualty Lines of Business

•

Asset Composition


•

Class 1 Captives
Single parent captives insuring only the risk of that parent
or affiliate

•

Class 2 Captives
Single parent or multi-owner captives with allowance
to insure 3rd party risk up to 20% of GWP

•

Class 3 Captives
Captives with allowance to insure 3rd party risk over
20% of GWP

•

Largest domicile in respect to gross written premiums
and captive formations

•

High rates of retention

•

Growing geographical diversity in the location of risk

•

Casualty leads Property in insurance coverage

•

Strong balance sheet positions with 2/3 of assets in
cash and quoted investments

Ongoing Compliance
Brad Adderley, Partner, Insurance Team
Appleby



Companies Act 1981
• Directors, Officers and Residency
• Annual Government Fee
• Annual Declaration
• Annual General Meeting
• Dividends and Other Distributions


Insurance Act 1978
• Dividends and Distributions
• Requirements of Controllers
• Powers of Bermuda Monetary Authority
• Controller
• Obligations of Insurer
• Punishment
• Recourse


Companies Act 1981 / cont.
Directors and Officers
• Minimum – Directors
• Minimum – Officers

• Residency


Companies Act 1981 / cont.
Annual Government Fee
Assessable Capital – US$

Fee – BDA$

•
•
•
•
•
•

4,070
6,275
8,360
10,455
18,670
31,120

120,000
120,001 – 1,200,000
1,200,001 – 12,000,000
12,000,001 – 100,000,000
100,000,001 – 500,000,000
500,000,001 or more

Companies Act 1981 / cont.
Annual Declaration
• Timing
• Prepared and signed by whom
• Confirmation …
– Business
– Authorised Capital
– Share Premium
– Currency


Companies Act 1981 / cont.
Annual General Meeting
• Timing
• Extension
• Sanction
• Board Meetings


Companies Act 1981 / cont.
Annual General Meeting
• Audited Financials
• Auditors and Fee
• Size of Board
• Directors
• Alternate Directors
• Fees